BlackRock to lay off 500 employees amid market turmoil

By Annie Massa

Updated 11 Jan 2019 — 7:14 AM, first published at 7:08 AM

BlackRock, the world's largest asset manager, is laying off about 500 employees, its biggest cut in headcount in three years, according to an internal memo, which didn't specify which businesses will be most affected.

Asset managers are under pressure as volatility roils markets and investors pile into low fee funds. The industry is also deploying technology across its businesses to reduce costs. State Street, the giant custody bank and asset manager, trimmed its senior management ranks by 15 per cent starting this week. AQR Capital Management, the quant manager, is also cutting jobs after a dismal performance in 2018.

"Market uncertainty is growing, investor preferences are evolving and the ecosystem in which we operate is becoming increasingly complex," Rob Kapito, BlackRock's president, said in the memo.

When BlackRock reported third-quarter earnings in October, long-term net inflows were at their lowest point since 2016. Fink said the firm was "not particularly happy" with the results. At the time, he attributed the weakness to geopolitical upheaval prompting investors to shed riskier positions.

The company's shares slid 24 per cent last year, the worst performance since 2008. Revenue has also been slowing. Third-quarter revenue fell 1 per cent from the previous period. BlackRock is forecast to report a 4 per cent decline for the fourth quarter, according to analysts surveyed by Bloomberg. The company reports earnings next week.

Since 2013, a big round of layoffs has come every three years. The last time the company had cuts of this size was in March 2016, when it slashed 400 jobs. Before that, it cut jobs on a similar scale in 2013 after a reorganisation.

Mark Wiedman has been promoted to a new international role that positions him as a likely heir-apparent to Fink. Peter Braig